Lululemon Athletica (LULU) Moving On Heavy Pre-Market Trading

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Lululemon Athletica ( LULU) as a pre-market mover with heavy volume candidate. In addition to specific proprietary factors, Trade-Ideas identified Lululemon Athletica as such a stock due to the following factors:

LULU has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $105.7 million.

LULU traded 436,327 shares today in the pre-market hours as of 8:00 AM, representing 17.9% of its average daily volume.

lululemon athletica inc., together with its subsidiaries, designs, manufactures, and distributes athletic apparel and accessories for women, men, and female youth. It operates in three segments: Corporate-Owned Stores, Direct To Consumer, and Other. LULU has a PE ratio of 22.4. Currently there are 7 analysts that rate Lululemon Athletica a buy, 1 analyst rates it a sell, and 17 rate it a hold.

The average volume for Lululemon Athletica has been 2.5 million shares per day over the past 30 days. Lululemon has a market cap of $4.5 billion and is part of the consumer goods sector and consumer non-durables industry. The stock has a beta of 1.48 and a short float of 28.5% with 10.12 days to cover. Shares are down 34.5% year-to-date as of the close of trading on Tuesday.

TheStreet Quant Ratings rates Lululemon Athletica as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:

Despite its growing revenue, the company underperformed as compared with the industry average of 11.5%. Since the same quarter one year prior, revenues rose by 11.2%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.

LULU has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 7.20, which clearly demonstrates the ability to cover short-term cash needs.

The gross profit margin for LULULEMON ATHLETICA INC is rather high; currently it is at 54.13%. Regardless of LULU's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 4.93% trails the industry average.

Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 44.31%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 59.37% compared to the year-earlier quarter. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.

The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Textiles, Apparel & Luxury Goods industry. The net income has significantly decreased by 59.9% when compared to the same quarter one year ago, falling from $47.28 million to $18.98 million.